Ultimate Guide To Personal Loans In Singapore

Understanding the intricacies of the process, benefits, and eligibility requirements is crucial when navigating personal loans in Singapore. Personal loans can provide much-needed financial support, from covering emergency expenses to funding home improvement projects or paying for a wedding. With options like fixed interest rates, these loans offer predictable payments, making budgeting easier. Additionally, if you want to manage existing debt, you can consolidate debt through a personal loan, simplifying your repayments.

However, before applying, you must fully grasp how a Singapore personal loan works, the available types, and the factors to consider when choosing the right option. For instance, a credit union might offer lower interest rates, while other lenders may provide competitive deals on the best personal loans. It’s also important to compare personal loans to find the best terms and conditions for your financial situation. In this guide, we’ll cover everything you need to know to make informed decisions about personal loans.

A personal loan is a lump sum borrowed from a bank or personal loan lenders, which you agree to repay with fixed monthly payments over a specified loan term. These loans can be used for various purposes, and they come in two main types: secured and unsecured personal loans. This is in contrast to a business loan, which is used for business operations.

Personal loans have a lower interest rate than other types of loans. For personal loans that have high interests, this is only because the borrower has a high chance of defaulting, so it is the responsibility of the lender to take precautions.

A personal loan is a lump sum borrowed from a bank or personal loan lenders, which you agree to repay with fixed monthly payments over a specified loan term. These loans can be used for various purposes, and they come in two main types: secured and unsecured personal loans.

What Are Unsecured vs. Secured Personal Loans?

In Singapore, personal loans generally fall into two categories: unsecured and secured. Unsecured personal loans do not require you to offer collateral, such as your home or car, to secure the loan. Since the lender assumes more risk, the interest rates for unsecured loans are typically higher.

On the other hand, secured loans require you to pledge an asset, such as property or savings, as collateral. These loans usually come with lower interest rates, as the lender has security in your assets. For example, if you take out a secured loan of S$20,000 to renovate your home and use your property as collateral, you could benefit from a reduced interest rate.

However, the downside is that if you fail to repay the loan, you risk losing your pledged assets, such as your home or savings. Therefore, weighing both options’ pros and cons before deciding is important.

How Much Can You Get from a Personal Loan?

The loan amount you can borrow depends on several factors, such as your credit history and monthly income. However, borrowing more than you can afford can strain your monthly payments, so it’s wise to assess your financial situation before applying.

How Do You Receive the Loan Amount?

Once approved, the loan funds are transferred directly into your bank account. You can use the funds for any personal expenses.

How Soon Can You Receive the Loan Amount?

In many cases, the approval process for personal loans is quick, and borrowers may receive their funds in as little as one to two working days.

How Much Can You Get From a Personal Loan?

The loan amount you can secure depends on your annual income, credit score, and the lender’s policies. In Singapore, personal loans are typically capped at four to ten times your monthly income. However, it’s advisable not to borrow more than you can comfortably repay. For instance, if you have other existing debt, you should consider how an additional loan amount might affect your debt-to-income ratio.

What Can a Personal Loan Be Used For?

A personal loan in Singapore is highly flexible and can be used for various financial needs, such as:

Financial Emergencies

Personal loans are an excellent resource for covering unexpected expenses, such as medical bills or urgent repairs. The fast disbursement of funds can help you manage these emergencies swiftly, providing peace of mind when financial surprises arise.

Wedding Expenses

Weddings can be expensive, and personal loans offer a convenient way to cover the costs, from the venue and catering to attire and photography. By spreading the cost over time, you can focus on enjoying your special day without the immediate financial strain.

Vacation Expenses

If you’re planning a dream holiday abroad, a personal loan can help you finance the trip without dipping into your savings. You can spread the cost of flights, accommodation, and activities, making your holiday more affordable and allowing you to enjoy it stress-free.

Home Renovation

Whether updating your kitchen or making essential repairs, a personal loan can provide the funds needed for home improvement projects. This allows you to enhance the comfort and value of your home without the need for large upfront payments.

Starting a Business

For those looking to venture into entrepreneurship, personal loans can serve as startup capital to fund their new business. From buying equipment to covering initial operational costs, a loan can help them kick-start their business aspirations.

Education

Personal loans are also a practical solution for funding education, whether paying university tuition fees or enrolling in professional courses. This allows you to invest in your future without financial barriers to your educational goals.

Credit Card Bills

Personal loans can help consolidate multiple credit card balances into a single, more manageable monthly payment if you’re struggling with high-interest credit card debt. This simplifies your finances and may reduce the overall interest you’re paying.

Why Should You Get a Personal Loan?

Fast Disbursement

A key advantage of personal loans is the speed at which the funds are disbursed. Once your application is approved, you can access the money quickly, making it ideal for urgent financial needs such as medical emergencies or unexpected expenses.

Low Interest

Personal loans generally have lower interest rates than credit cards or credit lines, especially if your credit score is good. This makes them a cost-effective borrowing option for those seeking to consolidate debt or finance large purchases while minimising interest payments.

Most Loans Don’t Need Collateral

Most personal loans are unsecured, meaning you are not required to provide any collateral, such as property or assets, to obtain the loan. This makes personal loans more accessible, as you can borrow without the risk of losing valuable assets if you cannot repay the loan.

Who Is Eligible for Personal Loans?

Personal loans in Singapore offer financial flexibility for various needs, but not everyone qualifies. Lenders have specific eligibility requirements that applicants must meet to be considered.

Qualifying for a Personal Loan

The eligibility criteria for personal loans in Singapore can vary between lenders, but there are some common requirements that most will consider. The applicants must be at least 21 years old. There is typically a minimum annual income requirement, ranging from S$20,000 and above for Singaporeans and Permanent Residents. More importantly, having a good credit score and a positive credit report is essential, as these show your ability to repay the loan.

How Do I Get a Personal Loan?

Applying for a personal loan is usually a simple process. Start by comparing personal loans from different lenders to find the best interest rates and repayment terms. Once you’ve chosen, you can submit your loan application. You’ll also need to provide essential documents, such as proof of income, identification, and credit report.

How Does OMY Help You Get a Personal Loan?

At OMY Singapore, we help you compare personal loan offers from multiple lenders, ensuring you get the best terms for your needs.

What Documents Will You Need for a Personal Loan?

For most personal loan applications, you’ll need:

• Proof of identity (e.g. NRIC or passport)
• Proof of income (e.g. payslips or CPF statements)
• Bank statements

How Long Does Approval Take for Personal Loans?

The approval process for personal loans typically ranges from one to three business days, depending on the lender’s procedures. Some online lenders may offer expedited processing, allowing applicants to receive approval within a few hours or by the next business day, especially for smaller loans or borrowers with excellent credit.

What Are the Fees Associated with Personal Loans?

When taking out a personal loan, it’s important to account for any associated fees. These can include origination fees, usually 1-3% of the loan amount, charged upfront for processing the loan. Other potential fees might include late payment fees or prepayment penalties, so reviewing the terms carefully is essential.

How Do You Ensure Your Loan Application Does Not Get Rejected?

To avoid rejection, it’s crucial to ensure you meet the lender’s eligibility criteria. This includes maintaining a strong credit score, meeting the required income levels, and providing accurate documentation. Additionally, reviewing the lender’s specific requirements beforehand can help you prepare a well-supported application, increasing your chances of approval.

What Are the Factors to Consider When Applying for a Personal Loan in Singapore?

Before applying for a personal loan, here are several factors you should consider:

Loan Amount and Interest Rate

When applying for a personal loan, it’s essential to borrow an amount that meets your financial needs without being excessive. Taking more than necessary could lead to unnecessary debt, while too little may not solve your problem. Additionally, you should compare interest rates across lenders to ensure you secure a competitive rate, as this will significantly affect the overall cost of your loan.

Loan Term

The loan term determines the length of time you have to repay the loan, directly impacting your monthly payments. A shorter term usually results in higher monthly repayments but allows you to pay less in interest over the life of the loan. Conversely, a longer term will lower your monthly instalments but increase the total interest paid.

Loan Fees and Charges

It’s important to understand the total cost of the loan, including any fees. These could include origination fees, late payment charges, and prepayment penalties. Carefully reviewing the lender’s fee structure can help you avoid unexpected costs and ensure the loan is affordable.

Rate of Interest Advertised vs. Effective Interest Rate

Many lenders advertise a nominal interest rate, but the effective interest rate (EIR) provides a more accurate picture of the loan’s actual cost. The EIR includes additional charges, so it’s important to understand this distinction to make a well-informed decision when comparing loans.

Effect on Your Credit Score

Taking out Singapore fast personal loans will affect your credit report, so it’s important to borrow responsibly. If managed well, timely repayments can improve your credit score. However, missing payments or overextending yourself financially could harm your credit profile, making it harder to borrow in the future.

Reliability of the Lender

Choosing a reputable lender ensures you are not exposed to scams or predatory lending practices. Always research lenders thoroughly, read reviews, and verify their credentials before applying. Reliable lenders should have clear terms and a proven track record.

Red Flags To Watch Out for When Choosing a Personal Loan

Be wary of lenders offering exceptionally low rates that seem too good to be true or those who request upfront payments before approving your loan. These could be signs of a scam. If anything appears suspicious, it’s best to avoid the lender and report the issue to the appropriate authorities.

How To Choose the Right Personal Loan Repayment Plan

It’s essential to select a repayment plan that suits your budget. Consider automatic GIRO payments, to ensure timely repayments without missing due dates. You may also explore loan refinancing to secure lower monthly payments if necessary.

Best Alternatives if You Don’t Qualify for Bank Personal Loans

If you don’t meet the eligibility requirements for bank loans, consider the following alternatives:

Line of Credit

A personal line of credit is a flexible borrowing option that differs from traditional loans. Instead of receiving a lump sum, you are given access to a credit limit, and you can borrow as needed. Interest is only charged on the amount you withdraw, making it a useful option for managing ongoing or fluctuating financial needs.

Licensed Moneylenders

Licensed moneylenders may be a viable alternative if you don’t qualify for bank loans. These lenders typically offer smaller loans with less stringent eligibility criteria, and approvals are often quicker. However, it’s important to note that interest rates are generally higher, so it’s essential to carefully evaluate the terms before committing to this option.

Take a look at our list of the best personal loan Singapore options. If you don’t have time to examine each loan, simply use the table below to compare personal loan rates cost side by side.

Note: The table above is based on a S$10,000 loan amount (one year tenor), and the lowest EIR by banks (except for Crawfort). This rate may not be applicable to you.

If you need cash fast, then Crawfort is the best personal loan in Singapore that should top your list. This company is a licensed moneylender that offers loan products that cater to the needs of every Singaporean.

For their personal loan, you can apply with Myinfo. Just log in with your SingPass and your loan application will automatically be populated with data from multiple government agencies.

In as fast as 8 minutes, you can receive your loan application result via SMS. Then, you can head to Crawfort outlet for a face-to-face verification. Finally, you can get your money.

For foreigners whose annual income is less than S$10,000, they can borrow up to S$500. For foreigners whose annual income is between S$10,000 to S$20,000, they can borrow up to S$3,000.

Meanwhile, Singaporeans whose annual income is less than S$20,000 can borrow up to S$3,000. Those whose annual income is at least S$20,000 can borrow up to 6x of their monthly income.

For this loan, nominal interest rates start from 1.8% per annum.

Apply for a fast cash loan today!

(The table is based on a S$10,000 loan amount, plus the minimum EIR. Please note that this rate may not be applicable to your unique loan offer)

With as low as 2.88% interest per annum (EIR 5.79%), it’s no surprise why this is our top choice when it comes to the best personal loan Singapore for individuals looking for savings. The processing fee for this lowest personal loan rates option is also affordable at only 1% of your approved loan amount.

All existing DBS and POSB users can apply for this loan using their SingSaver and get approval instantly. This loan is also a top choice for low income earners since it only requires a S$20,000 minimum annual income for Singaporeans. But if you earn over S$120,000 annually, you can apply for up to 10x your monthly income.

More From OMY: Best Personal Loan for Low Income Earners in Singapore

(The table is based on a S$10,000 loan amount, plus the minimum EIR. Please note that this rate may not be applicable to your unique loan offer)

Another best personal loan Singapore you should consider is the Standard Chartered CashOne Personal Loan. This loan is a stand out because of its low income requirement, and competitive interest rate.

With its 3.48% interest per annum (EIR 6.95% per annum) for borrowers, it’s one of the cheapest you can get in the country. For low income individuals, interest rates start at 9.8% and can go as high as 10.8% per annum (flat rate). Considering this, this particular product does not have the best personal loan rates you can find for this specific category.

This loan is also an incredible choice for those who only need a small amount since you can borrow as low as S$1,000. Loan tenure can be up to 5 years.

With this best personal loan Singapore, you can enjoy up to a whopping S$3,288 cashback upon approval, and get your loan amount in just 15 minutes.

Want to apply for this loan? Click here.

(table is based on a S$10,000 loan amount, plus the minimum EIR. Please note that this rate may not be applicable to your unique loan offer)

When it comes to the cheapest short-term best personal loan Singapore, this is the ultimate choice. With this loan, you can enjoy interest for as low as 3.2% per annum (EIR 6%). If you are an existing customer, you can enjoy a preferential interest rate of only 2.6% per annum (EIR 5% per annum)

You don’t even have to worry about processing fees because they are totally free.

Not only that, but this loan by HSBC has tons of promotions to help you save money. With this best personal loan Singapore, you can get cashback up to S$2,100.

Want to apply for this loan? Check out this page.

(table is based on a S$10,000 loan amount, plus the minimum EIR. Please note that this rate may not be applicable to your unique loan offer)

Many foreigners find it quite challenging to apply for a personal loan in Singapore since the requirements are very stringent, especially when it comes to their minimum annual income.

With the Citi Quick Cash Loan, foreigners with an income of over S$42,000 can apply in just a few clicks.

This loan allows you to convert your credit card/ready credit into cash that is payable for up to 60 months. With this loan, foreigners can borrow up to 4x their monthly income to settle their bills or spend for big-ticket purchases. The processing fee is also free.

For this loan, interest rates start at 3.45% per annum (EIR 6.5% per annum).

If you want to apply for this loan, visit this page.

(table is based on a S$10,000 loan amount, plus the minimum EIR. Please note that this rate may not be applicable to your unique loan offer)

Another loan that is great for foreigners is the DBS/POSB Personal Loan. Foreigners who earn at least S$20,000 annually can easily qualify for this loan. Its personalised interest rate can start from 2.88% per annum (EIR 5.79% per annum), although the final rate will be computed based on your personal credit history, as well as loan tenor and amount.

Apply for this loan here.

(The table is based on a S$10,000 loan amount, plus the minimum EIR. Please note that this rate may not be applicable to your unique loan offer)

If your goal is to borrow the highest amount possible, the CIMB Cash Lite is worth considering since it lets you borrow up to 12 times your monthly salary.

This best personal loan Singapore also has a low interest of only 3% per annum (EIR 5.64%), and no processing fee for a limited time. However, this promotion is only geared towards new customers.

Existing customers can enjoy a 4.5% interest rate per annum (EIR 8.21% to 8.41%). Loan tenure for this loan can be between one to five years.

Apply for the CIMB Cash Lite Loan here.

(The table is based on a S$10,000 loan amount, plus the minimum EIR. Please note that this rate may not be applicable to your unique loan offer)

If what you’re after is to get cash urgently, then look no further. The UOB Personal Loan is meant for individuals who want to fill their financial gaps immediately. Keep in mind that instant approval and cash disbursement is only limited to online applications submitted between 8:00 a.m. to 9:00 p.m.

With its low interest rates starting at 3.4% interest per annum (EIR 6.36% valid until 31 December 2022), and rebates up to S$3,288 or 2.5% of your approved loan amount (valid until the same date as well), you can enjoy maximum savings.

For loan tenors between 24 to 60 months, the processing fees will be waived. Meanwhile, the standard processing fee for the best personal loans that have a tenor of 12 months is 1%.

Apply for this loan on this page.

(The table is based on a S$10,000 loan amount, plus the minimum EIR. Please note that this rate may not be applicable to your unique loan offer)

Another personal loan we love when it comes to fast disbursement is the DBS/POSB Personal Loan. With this low interest personal loans option, you can get your cash in as fast as 15 minutes when you apply online. Not only that, but you can also get up to 2% cashback when you use promo code “POSBPL.” This promo is only valid for loans amounts of S$10,000 and above. Valid until 31 December 2022.

Want to apply for this loan? Click here.

(table is based on a S$10,000 loan amount, plus the minimum EIR. Please note that this rate may not be applicable to your unique loan offer)

This bank is the best place to take a personal loan. It is a top option of low income earners in Singapore because it only has a minimum income requirement of S$20,000. Unfortunately, it’s not the best option for low income foreigners since it has a minimum annual income of S$60,000 for the said category.

Click here to apply for this loan.

(The table is based on a S$10,000 loan amount. Please note that this rate may not be applicable to your unique loan offer)

If you’re thinking “I need personal loan in Singapore,” this loan should be on top of your list, especially if you earn less than S$30,000 annually. The minimum income requirement for this lowest rate personal loan Singapore is only S$20,000. You may also select a loan tenure up to 5 years.

Apply for this loan here.

Understanding how personal loans work in Singapore is vital for making informed financial decisions. Whether you need a loan for debt consolidation, to fund wedding expenses, or an emergency, knowing the loan terms, fees, and eligibility requirements can help you choose the best option. Consider all factors, including your credit score and the interest rates on offer, before making your final decision.

With this guide, you should feel more confident about navigating the world of personal loans and finding the right financial solution for your needs in Singapore. Always compare loan offers from multiple lenders and check your credit score before applying. To stay updated and explore more helpful articles on personal finance topics, visit OMY—your go-to source for financial insights and tips. Good luck with your personal finance journey!